U.S. small-business borrowing rises in December, but barely

By Ann Saphir

Published February 04, 2013

Reuters

SAN FRANCISCO – Borrowing by small U.S. businesses rose marginally in December, eking out a tiny gain for the year and suggesting headwinds for economic growth for the first few months of 2013, a report on Monday showed.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 112 from an upwardly revised 111.1 in November, PayNet said.

Borrowing was up just 1 percent from a year earlier.

PayNet had initially reported the November figure as 108.3.

PayNet founder Bill Phelan, located in Chicago, said the index suggests small businesses "haven't come out of their shell." PayNet's lending index typically correlates to overall economic growth one or two quarters in the future.

"It's underwhelming," he said. "The next two to five months are going to be pretty slow."

Small businesses are often responsible for the bulk of new job creation after recessions. The recent recession ended in 2009, but sluggish growth has meant weak job growth, and unemployment in January rose to 7.9 percent.

Separate PayNet data showed financial stress at near-record-low levels. Accounts overdue by 30 days fell to 1.20 percent of the total from 1.21 percent the previous month. A "normal" rate of delinquency is 1.5 percent to 1.6 percent, Phelan says.

Longer-term delinquency rates also eased. Accounts behind 180 days or more, which are considered in default and unlikely to be paid, dipped to 0.24 percent from 0.27 percent.

Accounts behind 90 days or more, or in severe delinquency, fell to 0.26 percent, from 0.27 percent.

PayNet collects real-time loan information, such as originations and delinquencies, from more than 250 leading U.S. lenders.

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